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SoundHound AI (NASDAQ: SOUN) is a leading developer of conversational artificial intelligence (AI) software, and its customers include some of the world's largest brands in industries like hospitality, healthcare, automotive manufacturing, and more.
SoundHound stock set an all-time closing high of $24.23 in late 2024, but it has since plummeted by 83% to close at just $4.11 last Friday, Nov. 6. The stock was trading at a sky-high valuation when it peaked, but it's now approaching the cheapest level since going public. Given the company's revenue continues to grow at a blistering pace, could this be the ultimate buying opportunity for investors?
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For the past few years, SoundHound's out-of-the-box software products have helped businesses integrate voice-activated AI into their everyday operations. Quick-service restaurant chains have used them to autonomously take customers' orders in the drive-thru and in-store, while several car brands have used them to install intuitive voice assistants in their latest vehicles.
But in May, SoundHound launched a new platform called the Orchestrated Agent System (OASYS), where enterprises can build custom AI voice agents to serve their customers and streamline workflows for their employees. OASYS combines the capabilities of SoundHound's products, along with the products of the six companies it has acquired over the last few years, which include Amelia AI and LivePerson.
SoundHound's proprietary speech recognition models sit at the foundation of OASYS, but enterprises can also plug in third-party models like those developed by OpenAI and Anthropic, giving agents the capabilities that best suit their needs. Agents built on OASYS learn from customer and employee interactions, so they constantly improve.
SoundHound says global hotel operator Resorts World Las Vegas used OASYS to create an agent that directly handles incoming bookings from customers. Moreover, a Latin American company used the platform to create an agent named Alex, which can handle 1,000 phone calls simultaneously. Alex has dramatically reduced waiting times for customers, while increasing the number of inquiries handled by 30%.
Those are just a couple of examples showing how OASYS is making a tangible real-world impact for enterprises.
SoundHound generated a record $62.4 million in revenue during the third quarter of 2026 (ended Sept. 30), up 48.5% from the year-ago period. That growth rate accelerated from 45% in the second quarter just three months earlier, but mainly because of the inclusion of LivePerson's revenue for the first time, given the acquisition officially closed in September.
SoundHound says its 2026 revenue is now on track to come in somewhere between $250 million and $260 million, up from management's previously forecasted range of $230 million to $260 million. The company then expects to generate somewhere between $350 million and $400 million in revenue during 2027, so it's growing rapidly.
SoundHound's bottom line has been a concern for investors because scaling an AI business isn't cheap, so losses were quickly mounting. The company lost $46.4 million on a generally accepted accounting principles (GAAP) basis during the third quarter, but that was a big improvement from the $115.9 million loss it suffered in the same quarter of 2025.
SoundHound thinks it can eliminate around $120 million in annualized costs during 2027, which could result in profitability on an adjusted (non-GAAP) earnings before interest, tax, depreciation, and amortization (EBITDA) basis. That would be a very significant milestone for the company.
When SoundHound stock peaked in 2024, it was trading at a sky-high price-to-sales (P/S) ratio of over 100. For some perspective, the technology-heavy Nasdaq-100 index had a P/S ratio of just 5.8 back then, so SoundHound was wildly overvalued.
But the 83% decline in SoundHound stock, combined with the company's strong revenue growth, has pushed its P/S ratio down to a far more reasonable level of 8. In fact, it's approaching its cheapest level ever, which was 6.4 in 2023.
I've been somewhat bearish on SoundHound stock in the past because of its high valuation and ballooning losses. But my outlook has changed based on its current P/S ratio and the potential for adjusted profitability next year, so I think investors who buy the stock now could be rewarded.
Chief executive officer Keyvan Mohajer believes there is a $1 trillion addressable market for agentic AI solutions for enterprises, so there is significant room for SoundHound to grow. As a result, investors who are willing to hold its stock for a long-term period of five years or more could do especially well.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool has a disclosure policy.
Should You Buy SoundHound AI Stock After Its 83% Plunge? The Answer Might Surprise You. was originally published by The Motley Fool
